Why India Inc aligns more visibly with the BJP government and its politics

Business elites believe that embracing majoritarian politics will yield substantial dividends—a misleading as well as myopic assumption.

Mukesh Ambani, Chairman and Managing Director, Reliance Industries Ltd, Nita Ambani, Founder and family during a ceremony at the Ram Mandir in Ayodhya | Photo Credit: PTI

Across the posh multi-storey homes of South Delhi, there is a new common theme. Saffron flags lie limp in the oppressive heat at the entrances of houses, residential housing societies and on scores of balconies, teeming with planters and elaborate windchimes. Distributed ahead of the Ram Temple inauguration, the saffron flags are emblazoned with the words Jai Shri Ram and remain as both a memory and evidence of the larger-than-life inauguration of the temple held in January this year, just ahead of the general election.

That these flags now remain as proud keepsakes, points to a vital social stratum, the business elite, and their approach to politics and the economy, mirroring Indian industry leaders perhaps.

Business elite and Ram temple

Two events have borne out what the approach for many of India’s business leaders seems to be. The Ayodhya temple inauguration event is the first. This grand spectacle saw the who’s who from India Inc. in attendance. From the Reliance group of industries to steel tycoon Lakshmi N. Mittal, everyone who was anyone in the world of business was in attendance. Telecom czar Sunil Bharti Mittal said he felt “blessed” to be in Ayodhya and called it an amazing day, something the entire country had been waiting for for years.

Aditya Birla group chairperson Kumar Mangalam Birla who was at the inauguration with his daughter and heir apparent Ananya Birla said not just India, but the entire world was celebrating this day, exhorting all Indians to visit the temple. Essar’s Prashant Ruia, real estate heavyweight Niranjan Hiranandani and new-age business leaders such as EaseMyTrip CEO and co-founder Nishant Pitti and Oyo founder and CEO Ritesh Agarwal were also there. Their selfies from the temple inauguration splashed across social media.

Anand Mahindra took to social media platform X explaining why this inauguration pointed to an ideal for good governance that the whole world should aspire to and that the word Ram itself transcended religion; wiping clean in one stroke, any other community’s point of view around either the temple, its deeply violent history, or the Constitution that guarantees a sovereign, socialist, secular and democratic republic where religion, politics, and business, are kept separate.

Never has religion and business seen such a transparent and absolute mix in the Indian landscape. Do business leaders now believe the only way to ensure a benign policy and government leads through the path of majoritarian religious beliefs? Or is it clear that doing business in India—a country that has always struggled with an inconsistent and unpredictable policy environment—now comes with an additional expectation attached to it?

In either case, the business industry is a highly influential and visible segment and how they choose to engage with the government sets the tone for the rest of India’s entrepreneurial community, and is a signal to the world navigating commerce in India.

Bonds with BJP

On the second event, there is a much clearer trail visible. Electoral bonds were a BJP-designed offering allowing a person or company to buy bonds from the government-owned State Bank of India and donate them to a political party in a completely anonymous and opaque fashion. The top contributors have business interests ranging from gaming to mining. In several cases quid pro quo between the company in question and the timeline of payments through electoral bonds to the ruling party, BJP, have raised calls for a thorough investigation.

Why is the current government and its ruling style so popular with Indian industry leaders?

One pillar of the argument has been that a strong government (and stronger leader) is the path to economic stability. Much of that logic reveals itself to be spurious. Research points to no correlation between an authoritarian-style government and improved performance metrics for a country. A recent piece by renowned journalist Martin Wolf cited an important paper on whether democracy does cause growth. The study found that “there is an economically and statistically significant positive effect of democracy on future GDP per capita”. The research shows that long-run GDP increases by about 20–25 per cent in the 25 years following democratisation.

Evidence from the paper also suggests that democracy fosters higher GDP by enacting economic reforms, improving fiscal capacity and the provision of schooling and health care, and perhaps also by inducing greater investment and lower social unrest. In short, in contrast to the prevailing view of ‘who needs democracy to prosper anyway’, democracies are the best model for equitable growth. It also bears remembering that when the Modi government came back to power in 2019, India’s GDP print was at 3.9, the lowest figure since 1992.

Again, two things may make the ideals of defending democracy and supporting distributed leadership seem unappealing for India’s business elite. One, that huddling close to the ruling party’s social and religious approach has had clear benefits. An evaluation finds that between 2014-15 and 2022-23, the rise of top-end inequality has been particularly pronounced in terms of wealth concentration.By 2022-23, the top 1 per cent income and wealth shares (22.6 per cent and 40 per cent) were at their highest historical levels and India’s top 1 per cent income share among the very highest in the world, higher than even South Africa, Brazil and the U.S As the study observes, there is now more economic inequality in India than there was under British colonial rule. A floundering FMCG industry, rising household debt and falling savings are all pointing to that conclusion.

Two, the threat factor is high but so are the perceived benefits. In what has clearly been carved into a big boys club, former RBI Deputy Governor Viral Acharya pointed to the co-relation between a concentration by the Big Five: the Reliance Group, Tata Group, Aditya Birla Group, Adani Group and Bharti Airtel and a bump up in inflation costs, on the back of more concentrated pricing power among this select group. Stretching from ports to defence on one end and oil to telecom on the other, a small cluster of decision makers are now charging prices that are substantially higher than other competitors in the market, ensuring that the term ‘industry’ has acquired a much narrower status under the present political regime and that this group has enjoyed far greater clout in the market.

Mergers and acquisitions by the top five have doubled since 2011, even as the next set of large businesses are seeing a shrinking share of the market. This massive top-five expansion has come with some robust policy support . Even as environmental experts express concern around the perils of unplanned deforestation and construction, in the five-years between 2018 and 2022, clearances for projects in protected areas shot up by more than 20 times. From 577 clearances in 2018 the number of forest, wildlife, coastal regulation zone and environmental clearances hit an all-time high of 12,496 by 2022.

For both, the top five industry groups and all the business interests that lie below there is incentive to keep political decision making concentrated and favourably inclined. For those below that top-tier segment, it’s vital to keep their limited turf protected and to ensure they don’t slip further down the ladder. An ever-keen Enforcement Directorate conducting raids at breakneck speed across the country serves as additional incentive.

In echoes of India’s new and bellicose foreign policy style, that often leans on whataboutery while presented with criticism, the business class and elite have taken on a somewhat similar role and tone. There is frequent finger-pointing at other nations; the mis-state of their finances, flawed global Central Bank action, rising debt, and falling status. The same questions could be asked of India but aren’t. When there are sporting medals to be won, or critiques to be made of the ‘foreign press’ these powerful industrialists are nimble and witty with their tweets, simultaneously lauding the country’s leader and the nation under his leadership.

India’s business leaders who will cast their vote just like every other citizen of India have seen a discernible change in their approach to not just doing business but on what they believe is best for business.  In his book 1984, George Orwell writes “Every record has been destroyed or falsified, every book rewritten, every picture has been repainted, every statue and street building has been renamed, every date has been altered. And the process continues day by day and minute by minute. History has stopped. Nothing exists except an endless present in which the Party is always right.” India Inc. agrees.

Mitali Mukherjee is Director of the Journalist Programmes at the Reuters Institute for the Study of Journalism, University of Oxford. She is a political economy journalist with more than two decades of experience in TV, print and digital journalism. Mitali has co-founded two start-ups that focused on civil society and financial literacy and her key areas of interest are gender and climate change.